Edward Conard

Top Ten New York Times Bestselling Author

Upside of Inequality Unintended Consequences
  • “Unintended Consequences provides a provocative interpretation of the causes of the global financial crisis and the policies needed to return to rapid growth. Whether you agree or not, this analysis is well worth reading.” - Nouriel Roubini, New York University; Chairman, Roubini Global Economics
  • Macro Roundup
  • Highlights
  • Blog
  • OpEds
  • Reviews
  • About
    • About the Author
    • About the Books
    • Read Excerpts
    • Read the Reviews
    • Debates
    • Media and TV
  • Topics
    • All Media Appearances
    • Productivity
    • Monetary Policy
    • Banking
    • Politics
    • Upside endnotes
    • Stuff Ed’s Assistant Thought He Might Like
  • Contact
  • twitter
  • facebook
  • youtube
  • linkedin
  • Advanced SearchChoose Categories To Search Within
    • Close Advanced Search

Advanced Search

Ed Conard in The New York Times: Where Piketty & Saez’s New Research Falls Short

Upon the arrival of Piketty and Saez’s updated inequality study reported, I explain why working class wages growth remains slow in the New York Times.

It’s unfortunate that the outsized success of the most successful Americans is blamed for the slow growth of lesser-skilled workers, as if the economy were a pie to be divided. The outsized success of the most successful Americans increases the demand for lesser-skilled labor.

Factors independent of the growing success of the most successful Americans slow the growth of lesser-skilled wages relative to the rest of the economy. The cost of trade with low-wage economies is shared disproportionately by low-skilled workers relative to the benefits, a large portion of which are enjoyed by high-skilled workers, retirees, and the poor. Trade deficits but downward pressure on low-skilled wages when risk-averse saving sit unused even at near-zero interest rates, as they do today. And low-skilled immigrants and their adult children, who depend on the same limited pool of high-skilled workers to raise their productivity and wages, spread these constrained resources over a greater number of workers. Each of these factors, and not the success of the most successful Americans slows lesser-skilled wage growth relative to GDP. 

It’s good to see that Piketty and Saez have finally incorporated the work of Richard Burkhauser. Their work now shows that median incomes have grown 50% since 1980. They still need to incorporate hours worked into their analysis, where declining workforce participation has had a significant effect on the distribution of income.

Read the full New York Times article here.

Share this:

  • Click to share on Twitter (Opens in new window)
  • Click to share on Facebook (Opens in new window)
  • Click to share on LinkedIn (Opens in new window)
  • Click to print (Opens in new window)
  • Click to email a link to a friend (Opens in new window)

© Copyright 2023 Coherent Research Institute · All Rights Reserved